Despite UK businesses increasingly waking up to the benefits of good environmental performance, a failure to embrace energy efficiency measures is still costing them over £6bn a year.

That is the conclusion from the Environmental Agencys annual Greener Business report, published today, which also claims that businesses collective neglect of water efficiency measures is costing them £3.5bn more a year.

However, the report, which summarises environmental performance across the industrial sectors the Environmental Agency regulates, including waste, combustion and energy production and water, also reveals that businesses have delivered improvements in most environmental metrics despite the poor economic climate.

Nearly nine out of every ten industrial sites the watchdog inspected were rated in the top two categories in terms of environmental performance and management, with 55 percent achieving the top grade, up from 47 percent from last year.

Businesses also delivered a 15 percent fall in sites for Global Warming Potential (GWP), a measure including carbon and other greenhouse gases, which compared favourably with the 4 percent decrease achieved between 2007 and 2008. The improvement was mainly attributed to the economic downturn, but the Environment Agency also reported that the number of serious pollution incidents it recorded was similarly down 25 percent to levels present in 2004.

Despite a report earlier this week predicting that global greenhouse gas emissions would quickly rebound from a global dip last year, Ed Mitchell, the Environment Agency's head of environmental protection regulation, told BusinessGreen that he expected the UKs performance to continuously improve.

"It is perhaps surprising, but encouraging, that even against a fairly bleak economic backdrop business performance has improved," he said. "People are still aware that the environmental issue remains important and have made a real effort to keep carbon issues at the front of their agenda. Also, when companies are under pressure to look at ways of saving money, they are realising that cutting energy output is a great way of saving money."

The Environment Agency also highlighted the growing problem of illegal waste operations. Although it has prevented over 2,000 illegal waste sites since 2008, the Agency said it had identified 800 more illegal sites, over 350 of which are operating within 50 metres of schools, homes or sensitive environmental areas.

There is at least one illegal site operating for every 10 legal sites, it said, promising to step up enforcement efforts when 11 individuals and four companies were charged with offences under waste legislation earlier this month.

"We'll continue to take a zero-tolerance approach to illegal waste sites," Dr. Paul Leinster, the Environent Agencys chief executive, said. "We [will] continue to work with the police and other agencies to gather intelligence and target these illegal operations."

However, he added that businesses that produce waste also have a responsibility to make sure their waste only goes to legitimate and licensed waste management firms.